Bankruptcy Changes Led to Subprime Crisis
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Around two years before the housing market crashed during the subprime crisis, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) in 2005. BAPCPA, or sometimes informally referred to as the bankruptcy abuse reform act (BAR), was passed to limit the abuse of bankruptcy by implementing a means test to determine who could…
The Financial Collapse Was In the Shadow Mortgage Market
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Following the collapse of the housing market in 2007 and 2008, not only did home prices fall along with the mortgage-backed securities they were wrapped into, but so did real estate lending. Between Q3 of 2008 and Q1 of 2012, real estate loans from all U.S. commercial banks fell for the first time in modern history, from $3.8 trillion to $3.5 trillion …
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